Over the last 15 years or so, a lot of great executive talent has left the telecom/datacom optical space either because they made a killing during the bubble, it became time for them to retire, or perhaps they had the good sense to get out of an industry in which it can be extremely difficult to make money. One notable exception is the CEO of Calix, Carl Russo, who rather quietly has continued to use his exceptional skills in a fairly successful way to execute on a very focused business strategy in the space. While like any leader, he has his share of imperfections, Calix has been a company that reflects the best characteristics of the man himself, a solid identification with integrity and credibility, often sorely lacking in our business.
When Cisco Systems bought Cerent at an incredibly high price, the one aspect that had to undoubtedly impress John Chambers the most was the personality and the demeanor of Russo, the startup’s CEO, who tempered his vision for the future with realism, and who reacted to his success with a refreshing amount of humility. For example, when he came aboard Cisco, he did not buy into the hyperbole surrounding the all-optical craze, while being one of the first executives to make practical presentations on the Internet’s potential to be used for remote apps in the home -- what would be later be turned into the arguably more amorphous and unimaginatively named Internet of Things (IoT). In addition, Russo gave much of the credit to the exceptionally high valuation for Cerent to the strides made by firms earlier, such as Cascade, Ciena and Juniper Networks.
Later on, when the opportunity for very large-sized cross-connects took a big hit even before 9/11 because service providers were unwilling to put so much capacity in a single box, which appeared to play a role in his demotion at Cisco, Russo evidently did not make any public excuses. In fact, in what has to be considered one of the most unusual statements in corporate history, he claimed it was his idea to be replaced by his successor.
Concerning Calix, there were some supposed experts who besmirched the idea that a relatively small newcomer could penetrate the “RBOC” space, and they were obviously proven wrong. Also, while other CEOs would not have been able to avoid the temptation to get into adjacent market segments, such as the metro, Calix relentlessly stuck to its mantra that it is only an “access player,” making it easier to ultimately make the leap to the wireless portion of the business, which would have been a high-risk proposition otherwise. Moreover, while we continue to believe that NFV/SDN in public networks is still being greatly exaggerated, Calix (along with ADTRAN) has been able to make actual preliminary strides, such as with soft ONTs, especially for greenfield situations, in a portion of the network that did not appear to receive a lot of initial attention for virtualization.
Certainly, Russo has been criticized as a “control freak” concerning the minutest details as well as for an occasional, subtle lapse into hyperbole, including recently referring to a “frighteningly faster rate of innovation in the cloud.” At the same time, he has developed an excellent track record for keeping promises, and his ability to personally finance the corporation himself when necessary, particularly in the early days, resulted in customers having a great deal of confidence in the supplier. Furthermore, unlike Ciena, which in our opinion, has engaged in obfuscation, when it has come to the decline in growth over the last few years in its core business, Russo fully owns up to the slowdown in his situation.
Lastly, we believe that Calix has been more upfront than ADTRAN about the inherent delays involving the next round of federal government spending on rural projects. While the former has taken a hit on the Street for its frankness, ADTRAN may have to pay a higher price for what may be perceived to be its more optimistic stance on the matter. Although both vendors are benefiting from the turmoil resulting from the Nokia/Alcatel-Lucent merger, another manifestation of the negative effects surrounding ADTRAN’s abandonment of its original strategy is the head-to-head competition with a player that is continually pushing new developments, a situation which was avoided by the preceding regime at the Huntsville, Alabama-based company.
[written by Mark Lutkowitz]